Thoughts on my Financial Goals. A Post in Collaboration with Scottish Widows #womenandfinance

Having just completed my accounts for the year – and yet again leaving it to the last minute – I am pleased to say that this is not going to happen again. I put this down to Ross and his organised ways. He meticulously plans his finances yearly, monthly and, on top of all of this, he maps out our financial future.

Unlike his predeccessor, Ross shares everything with me. What he earns, what our budgets are, what his expectations are for his earnings during the year. It is true that I have been pretty much self-employed since 2004 but so has Ross – and the turnover of his business was far greater than mine so he certainly knows what he is talking about. When he offered me the template for his monthly budgeting plan together with a monthly business forecast spreadsheet, I took him up on it – and I am so glad I did. I have been using it since the beginning of last year and, as I have got to grips with it, I have found it really useful.

Due to my previous relationship, I am still in debt. It isn’t something I am proud of and there are many reasons why (which are rather long-winded and I won’t go into now) but this year I am determined to make more inroads into clearing them. I have set up an agreed amount with each company and I make sure that these payments are accounted for before I spend anything on myself for the month. I hardly ever buy clothes and, if I do, they are from eBay or second-hand shops. I also pay Ross a set amount every month towards the house, I pay some money into Grace’s account and I also cover the cost of the TV, broadband and phone.

It never used to be this way. When I was a PAYE employee I earned a set amount every month. I had a contributory penision which my employer matched pound for pound but, since going self-employed, this has sat dormant for a number of years. Then, due to my debts, I have found that I just don’t have the disposable income to start paying into it again.

Ross and I have recently started to discuss pensions. We know that we need to plan for our future and we will be sitting down to do this in more detail this year. We have agreed that to pay for our retirement, we would rather do this through property investment.

We believe that property investment will offer us a better return for our money. With a contributory pension we are, in effect, gambling on how long we live. If we live longer then we win. If we die younger, the pension company wins. With all that in mind, the pension legislation can be changed at any time over the course of retirement too.

To our minds, bricks and mortar with is a tangible asset. Sure, there are risks involved as there is with anything. It could become a money pit but as long as we do what we can from the outset – which includes a full survey – then we should be able to cover any potential issues.

The biggest risk, however, is in renting it out and then not being able to get tenants. The problem then arises if you don’t have the disposable income to pay the mortgage. Again, you would need to make sure you did your research up front and made sure it was in a desirable area.

On the plus side of this, the investment will pretty much manage itself. After 25 years, the money you make has been reinvested. The net is zero and you have an asset to sell. Or, even better, you can keep the property and the income from the rent becomes a full profit. Then, when if we were to die then property is actual and can be passed on easier than a pension can. Allowing for inheritance tax of course!

With all this in mind, we need to make sure that we are definitely doing the right thing.

To mark their 200th anniversary, Scottish Widows have today published research relating to women and their finances. They have discovered that nearly one in five (17%) of women claim to be the main breadwinner in their relationship.

The study of 2,000 UK women found that their financial role in the family has evolved significantly in the two centuries since the insurer was established in Edinburgh to help secure the financial futures of the widows of Napoleonic war casualties.

While a third (37%) of women say their mothers were in charge of managing household finances while they were growing up, half (49%) of women living with partners are solely responsible for this today. What’s more, 32% of this group claim sole responsibility for funding day-to-day household expenditure, including energy bills, groceries, childcare and clothing, compared to just 13% of their partners. Other households are more balanced, with 44% of couples living together sharing the responsibility equally.

This certainly applied to me when I lived on my own with Grace during 2009 to 2012. I had to work out all my income, bills and budgeting. Since living with Ross though, all that has changed and he takes charge.

The study also shows that financial independence is especially ingrained in the younger generation, with the proportion of women in relationships who claim to be the main breadwinner in their household rising from 17% overall to 25% among 25-34 year olds.

This age group is also the most likely to keep finances separate from a partner, with more than half (52%) admitting they do not share any bank accounts with their partner, compared to 39% of women overall. On average UK women first feel financially independent at just 22 years old.

Ross and I do not have a joint account. We keep our finances separate but we are open about them and what we spend. We believe that being open about things like this, makes for a more honest and open relationship.

Jackie Leiper, Women and Savings Expert at Scottish Widows, says:

“When Scottish Widows was established in 1815 women were largely excluded from the workforce, couldn’t vote, had no right to their own property – and yet today our research found that the average woman feels financially independent by the age of only 22. Despite the huge strides that women have taken with finances, it is clear that childcare remains a significant barrier when it comes to career progression. We believe that both employers and the government should support families in balancing work and childcare responsibilities better. As part of Lloyds Banking Group, we are committed to seeing women succeed in the workplace and ensuring everyone can find the right work-life balance and plan for a secure financial future.”

I find this subject fascinating and I am pleased to say that I will be joining a live Twitter Chat tomorrow – 3rd February – from 8pm to 9pm. This is being run by Scottish Widows, hosted by Jackie Leiper (@ScottishWidows) and Sarah Pennells from SavvyWoman.co.uk. (@savvy_woman) together wih Tots 100 (@Tots100). The hashtag #womenandfinance will be used for the event. Please come along and participate. There will be plenty of opportunities to ask questions – I know I will be!